QA businesses face prospect of $15 minimum wage

Chocolopolis owner Lauren Adler relies on chocolatiers like intern Jon Bedell, who is slicing candied ginger. While the chocolatiers make more, Adler does have some minimum-wage employees. Photo by Sarah Radmer

Owner Andrea Nakata said she may need to close the doors at Le Reve bakery if a $15 minimum wage is instituted. Photo by Sarah Radmer

Lauren Adler opened Chocolopolis in 2008 amid the economic recession. Things are just starting to get back to normal, she said. Photo by Sarah Radmer

<

1

2

3

>

Lauren Adler had always wanted to own a specialty-food business and incorporate her love of chocolate. She opened Chocolopolis (1527 Queen Anne Ave. N.) in Queen Anne in July 2008, specializing in craft chocolate made with high-quality cacao. She also makes chocolates in-house, sells online and has a growing wholesale business.

Adler, who has a few minimum-wage employees, is concerned about how the proposed $15 minimum wage could affect her business that is just pulling itself out of the struggling economy.

“You think, ‘Oh, my god, I’m going to be able to make it,’ and then you just get thrown these huge curveballs that make you wonder again, ‘Is it going to be sustainable?” Adler said. “It’s draining. It’s just very upsetting. It’s your baby, and you want it to succeed.”

On April 3, the Queen Anne Chamber of Commerce hosted a panel with three experts on the $15 minimum-wage movement in Seattle. During the meeting, Adler stood up and said that she’s not even paying herself yet, so it seems impossible to be able to afford a $15 wage for all of her employees.

The $15 minimum-wage movement has gained traction in Seattle as the cornerstone of Seattle City Councilmember Kshama Sawant’s campaign and Mayor Ed Murray’s promise to raise city-government minimum wage. Murray created the Income Inequality Advisory Committee (IIAC) last December. The committee is nearing the end of its four-month term and will deliver its recommendations on raising the minimum wage to Murray by the end of this month.

Robert Plotnick, professor of public affairs at the University of Washington, was one of the three authors for the mayor’s commissioned report analyzing how a minimum-wage increase would affect Seattle. The report took existing population data and determined one-quarter of Seattle’s workforce would get a raise to $15. This would affect restaurant and hotel industries the most.

Plotnick said for some small businesses, the effect won’t be as big because their competitors will all face the same wage increase. Still, some businesses may look to relocate, he said.

“What happens to a small business depends on its competitive position,” he said. “There’s no on quick answer; it’s very subtle.”

Facing reality

The average chocolate bar Adler sells costs about $10. Adler has two full-time chocolatiers, one-part time chocolatier and an intern working in the kitchen making chocolates. On the retail side, she has about eight employees, most of whom are part-time and students. Not all of her employees work at minimum wage, but most do.

Paying minimum wage means she has a higher turnover, but that’s something Adler’s willing to deal with because she knows people get to come in and work in a friendly, educational environment and then move on to other things.

Adler said her situation is not unique. Opening a business at the start of the recent recession didn’t help, either. Now, she’s at a point where she’s seeing sales grow and her wholesale business is taking off. Labor is 50 percent of her revenue, and rent is another 25 percent.

“If something happens that isn’t phased in, there’s going to be a lot of small businesses wondering, ‘How do I survive this?’” she said.

After a trip with friends to Paris, Andrea Nakata began dreaming of her own “taste of Paris” on Queen Anne and, three years ago, opened Le Rêve Bakery (1805 Queen Anne Ave. N.).

Nakata employs 18 people at Le Rêve, from baristas to pastry chefs. Not all of her employees are paid minimum wage, but positions like her baristas make minimum wage plus tips.

The intricate pastries require a lot of labor, Nakata said, which makes up 30 to 50 percent of her budget each month. If the wage went to $15, it would likely raise her payroll to 80 percent, she said: “I’m not going to be able to afford to pay the bills.”

At the chamber meeting, Nakata said she’d likely need to close her doors if the wage increase goes into effect.

“I kind of keep my political views to myself, but this is really hitting home for me,” she said. “This dream of mine could crumble because of this.”

Raising the minimum wage won’t only affect Nakata’s minimum-wage workers, it will also raise the wage for her other employees who have attended culinary school and earn a higher wage.

Nakata feels like she did everything right with her business plan, and the crowded bakery each day is a testament to that, but “I didn’t plan for this hike in payroll, and I really didn’t plan for the high taxes we have to pay as a small business,” she said.

“I would love to be making minimum wage,” she said. “I’d love to pay my staff not just minimum wage but more than that. But you have to be realistic, too.”

Because the minimum-wage increase has become a political agenda, the ramifications aren’t being looked at, Nakata said; if she closes her doors, her 18 employees will be without a job.

“I think what they’re missing the boat on is the fact that these small businesses keep the community together,” she said.

Adler wanted to open Chocolopolis in Queen Anne because it’s a “wonderful community” and wanted a personal relationship with her customers. But rents in the area are high and on par with Capitol Hill, and Queen Anne doesn’t have the same foot traffic.

Adler hopes the community recognizes how important this issue is to small businesses in the neighborhood and supports them no matter what happens, “because they are going to have a street of chain stores and banks if they’re not paying attention,” she said.

Raising the minimum wage is “just a Band-Aid,” Nakata said. People should focus on other things, too, like job training and education — “I think that this is just a small part of how we can help bridge that gap.”

From a policy standpoint, Adler disagrees with the wage gap and wants to see things improve, but she worries this is an oversimplified solution to the problem. When things get oversimplified, “there’s a lot of unintended consequences that people don’t think about.

“It also feels like everybody when they hear ‘business,’ they think big business,” Adler added. “Small business, it’s really different. I don’t have the deep pockets; I don’t have the base of cash to fall back on.”

Speaking out

At the chamber event, Capitol Hill Chamber of Commerce executive director Michael Wells, a member of the IIAC,encouraged business owners to talk to other business owners, customers, the media and decision-makers. Those who have spoke out have been vilified, Wells admitted, but small-business owners need to talk. All three panelists encouraged people to talk about the emotional side of the issue versus just talking about the numbers.

“Change is coming,” Wells said. “If we remain silent, the decision will be made without us.”

Wells also pushed the chamber to team up with another neighborhood, like Rainier Valley, to show that this is a universal issue for Seattle business owners.

Voters should expect a November ballot initiative from the $15 Now campaign (filed Monday, April 14) that is even less in favor of local businesses, to repeal what the council does, said Seattle City Councilmember Tim Burgess, another panelist.

“Make sure your voice is heard by myself and my eight other colleagues,” Burgess said, “one of which might not be listening,” referring to new Councilmember Kshama Sawant.

Until a decision is made, Adler is focusing on her growing business.

“The reality is I have to keep my head focused on just growing the sales and getting there.”